The Cardano ecosystem is preparing to unleash the full potential of DeFi, with its DEXes, Lending Platforms, NFT Marketplaces, Launchpads, Gaming, and other categories.
Blockchains are sealed compartments systems that can only refer to their own data, established by consensus. Oracles are the solution to the problem of working with external information, which is vital for many daily use cases.
In my previous article I have explained in depth this tool for the crypto industry. Now, I will tell you about the developments of Oracles for the Cardano blockchain.
DeFi is growing rapidly, with new financial products for investment, but it is not enough for people who really need new financial forms for production.
RealFi, is an ecosystem of products that eliminates the frictions between the liquidity of cryptocurrencies and the economic activities of the real world, to offer attractive returns to holders of cryptocurrencies, and cheaper financial / credit products for conventional uses.
In this context, the Oracles will be most useful.
Speaking about the adoption of RealFi, Charles Hoskinson said: “It is our belief that over the next 12 to 24 months the majority of DeFi providers will be systematically upgrading to RealFi, to actually encumber identity, and metadata, to create proper standards and make sure they’re secure and functional and to ensure they resolve the issues of regulation and governance, and also they’re in the market for new customers.”
Ergo Oracles at Cardano’s Service
The Ergo Oracles pools are a tool that allows new possibilities in terms of warranty. They are built on different hierarchies:
- First layer: Oracle, or aggregation of data from different Oracles
- Second layer: Individual Oracles together in pools, with the possibility of collateral cutting for better data reliability (this feature is not implemented in Chainlink)
- Third layer: A pool of Oracle pools
The eUTxO model allows the construction of complex data structures on top of existing ones (still remunerating the data used in each step of the construction) for highly personalized applications, giving a permissible flexibility and not allowed.
Ergo’s eUTXO model offers benefits for Oracle systems that were not previously available. Oracle pools act to decentralize the provision of data, ensuring that both the process and the data itself are more reliable.
Ergo brings some unique features to the Cardano ecosystem:
- eUTxO (as Cardano uses), but over PoW
- Full Turing smart contracts, which allow formal verification based on Scala, with a protocol design similar to that of Plutus in Cardano, which will allow to carry very easily contract specifications from Ergo to Cardano
- Sigma 1 Protocols (similar to Schnorr signatures) that enable privacy preservation features, built directly into smart contracts
- Storage rental, whereby smart contracts and applications can then refer to this data living on the blockchain.
The model also allows governance voting to determine the key parameters of Oracle pools. The governance community can decide variables such as the length of the epoch, the number of Oracles that are paid to publish valid data points, the minimum guarantee they require, the number of Oracles per group, etc. There is a high degree of flexibility and the parameters can be changed based on current needs. New Oracles can be invited to a group, others removed, etc.
Oracle pools are paid for by the DApps that use them over time. While everyone can use Oracles, and everyone who uses them has an incentive to fund them, this costs very little – a small percentage of additional fees on a given app.
The Oracle NUTS
This service provides the first generation of Oracles running on the Cardano blockchain since epoch 228.
Using data provided by Ergopools, developer Marek Mahut, operator of the NUTS pool, has created a simple solution for Cardano.
Information from the Oracle of Ergo is published on the Cardano blockchain via metadata.
The Oracle NUTS currently offers 11 data streams:
- ADABTC, ADAEUR, AGIBTC, BTCUSD, ERGUSD and ADAUSD from Coingecko,
- ADAUSD and ERGUSD from Ergo Oracle pools,
- BTCDIFF from Trezor’s blockbook,
- TSLA from Investors Exchange and
- DRAND from League of Entropy Randomness Beacon.
In addition, NUTS uses a financing scheme inspired by Ergo’s approach for Oracle pools, which treats external data as a public good that will be made available free of charge.
This is a breakthrough, as it firstly reuses work already done by Ergo’s Oracle pools, allowing Cardano to publish a reliable price feed more efficiently, and secondly, it provides the first steps in building interoperability between the two platforms.
During the Cardano Summit 2021, the strategic collaboration with Chainlink Labs was announced, which will provide the Oracle service on the Blockchain.
Chainlink, provides Oracle service to power hybrid smart contracts on any blockchain. Oracle Chainlink networks allow smart contracts to reliably connect to any external API.
This collaboration between IOHK and Chainlink Labs will provide access to a wealth of secure data, helping DeFi achieve its promise of building a less expensive and more inclusive global economic system. Initially, the information sources for real-time market prices will be linked to Cardano.
IOHK founder Charles Hoskinson said: “Oracles are essential for making real-world data accessible in Cardano and supporting advanced smart contracts such as DeFi applications. IOHK is committed to providing developers with the most secure and robust tools to create useful solutions on Cardano, making it an easy option to integrate Chainlink’s market leading Oracle solution. The integration of Chainlink pricing sources will not only reduce time-to-market for Cardano developers, but will also establish a secure foundation for Cardano’s DeFi ecosystem, helping to make Cardano more trustworthy for users. from all over the world.”
Chainlink Data Feeds is a collection of decentralized Oracle networks, the most widely used in DeFi. The design pattern of these Oracle pricing networks follows a security through a verifiable decentralization approach.
Chainlink Data Feeds uses data aggregators, because they provide the strongest market coverage, to strengthen the price data against the single source model that could manipulate the resulting data. This feature is especially important to provide accurate data to markets with relatively low volume, compared to traditional financial markets.
Oracle’s solutions may become more robust as they Incorporate multiple data sources, as long as they do not sacrifice quality, adding individual data sources of low reliability. However, there may be situations where only a single high-quality data source is available, which is where the most advanced cryptographic techniques can ensure data quality.
Chainlink nodes that participate in price benchmark data contracts take advantage of external adapters, allowing them to connect to any premium API. These APIs offer higher quality data, faster response times, and are guaranteed in terms of availability and quality of service. External adapters are modular, can be written in any programming language, and can be hosted from a different server than the Chainlink node.
API3: The Web3 API Economy
API3 will connect decentralized applications, with the abundant data and services offered by traditional web APIs, thus expanding the applicability of the blockchain without sacrificing decentralization. This will be achieved through dAPI, fully decentralized and native blockchain APIs, which will be configured, managed and monetized at scale by API3 DAO.
Using the API3 token will grant its holders full governance rights over the DAO, along with all associated rewards. The deposited API3 tokens will be used as collateral for the chain’s insurance service that will provide quantifiable and reliable security guarantees to dAPI users.
The API3 solution incorporates a variety of qualities by design, the most important of which is safety. DAPIs do not rely on third-party Oracle, which is a constant and significant risk factor in workarounds.
The second quality of the API3 solution is robustness on multiple levels. Powered by Airnode, a completely serverless Oracle node, which can be deployed by any API provider for free, and requires minimal daily management.
This configuration is highly resistant to downtime and coupled with a stateless node design, which is not easily affected by errors or adverse network conditions, the Oracle API3 is designed to be robust.
Additionally, dAPIs will be governed by a DAO that maintains a self-regulating balance of risk and reward, through well-designed incentives, providing a robust risk mitigation framework.
The third quality is that the dAPI eliminates the intermediaries, and gives them profitability. They do not have to pay the intermediary tax, which is the payment made to third-party Oracles to encourage them not to attempt an attack. Additionally, data sources made up of Oracle’s own do not require excessive redundancy at the Oracle level.
Charli3: Cardano’s Decentralized Oracle
Charli3 is an open source decentralized Oracle for the Cardano network, providing and verifying data, initially focused on blockchain economic values, for blockchain applications.
Charli3 will use blockchain-based rewards for node operators who verify the data.
Cross-platform accessibility and cross-chain applications are growing in the ecosystem. Ethereum is currently the largest DeFi player, but it has notable issues with scaling and transaction fees. These issues are solved with a native Cardano Oracle service to capture the market for ADA-based applications.
ADA has a superior metadata infrastructure, and identity can be verified on the network, bringing increased security and attention to the rapid growth of decentralized identity. ADA-based applications will be at the forefront in solving these problems. This is why these projects will prefer a native Cardano Oracle service.
Has a certificate of audit Certik, November 13, 2021.
Wolfram Alpha, is a major computational engine, which will integrate data from the Cardano blockchain, into its Oracle functionality . The integration will be done through Wolfram Blockchain Labs, a subsidiary of Wolfram Research.
Wolfram has one of the largest data sets in the world to operate on.
This will allow developers to integrate external data into the Cardano blockchain, an essential function for much of the smart contracts.
Although Cardano is not the first blockchain to integrate with computational technology, and with Wolfram’s knowledge base, the partnership continues to represent a major step for enterprise-focused blockchain. Wolfram Alpha is a natural language processing tool that powers the smart assistants Siri and Alexa, from Apple and Amazon respectively.
Wolfram previously integrated with the Bitcoin and Ethereum blockchains, as well as the ARK and Bloxberg blockchain framework.
In addition to developing smart contract-based applications for the blockchain market, the partnership will also allow Wolfram Blockchain Labs (WBL) to include Cardano-specific content in their course material. This will allow developers of all backgrounds to learn how to take full advantage of the various tools offered by Wolfram, and about the Oracles for Cardano.
Developed by Wolfram Research, Wolfram Alpha acts as a so-called “response engine”, providing answers to factual queries directly by calculating the answer from structured data.
WBL will integrate data from the Cardano blockchain into Wolfram Alpha, allowing developers to integrate external data into Cardano smart contracts. This partnership will specifically address work on so-called “cutting edge Oracles,” which companies believe are a necessary component for building advanced smart contracts.
PIGY: The Minimum Cost Oracle
PIGY is a general purpose Cardano Oracle, which publishes information off-chain, such as interest rates or commodity prices, in contracts smart as string data attached to the Oracle’s eUTxO. The Oracle fee is paid in PIGY TOKEN, plus the network fee that is paid in ADA.
This Oracle went live on the Cardano mainnet immediately after Alonzo’s Hard Fork. It publishes updates to its data sources every day at 12:00 UTC.
It has flow of 33 data, from the Federal Reserve Bank Of New York, from Coingecko and from Metals.Live
Its code is published in Github.
Very insightful pointers on data security, good read, Thanks!
Thanks! my pleasure.